Prime minister: We must be prepared for possible economic crisis ({{contentCtrl.commentsTotal}})

Prime Minister Jüri Ratas (Center).
Prime Minister Jüri Ratas (Center). Source: Valitsuse kommunikatsioonibüroo

Prime Minister Juri Ratas (Center) says that the Estonian economy is exhibiting several warning signals and should prepare for possible crisis, but at the same time did not confirm the country was in crisis already.

"What is undoubtedly of uppermost concern today is the lives and health of the people of Estonia," Ratas said at prime minister's question time at the Riigikogu Wednesday.

"There is no way around the warning signs in the economy, and there are at present many of them," je added, noting that existing economic forecasts are no longer applicable, but that new, replacement forecasts could not be drawn up yet.

He did however note that the Ministry of Finance and the Bank of Estonia  are currently working on updating economic forecasts as quickly as possible.

"Making new reliable forecasts is impossible at the moment, and we must be ready to face a possible crisis," Ratas said, adding that the state has the capability to take out a loan where needed.

Ratas also praised the work of Minister of Finance Martin Helme (EKRE) and added that in the present situation, closer communication between the government and the Riigikogu is required.

"The government has convened a working group chaired by the minister of finance, which is in the process of mapping out all dangers and warning signs," he said. 

Estonian government ministers do not sit in the Riigikogu, but must appear before it on a regular basis, to answer questions.

Finance minister Martin Helme said Tuesday evening on ETV's "Esimene stuudio" politics show that the country was in an economic crisis which may exceed that which began in 2008, but at the same time the solution would not be austerity measures.

Economic affairs minister Taavi Aas (Center) appeared on ERR's politics discussion show "Otse uudistemajast" Wednesday and said that infrastructure schemes such as construction and roadworks were one possible economic stimulus, while adding that there were no plans to raise taxes or cut public sector pay.

Analyst with major bank SEB Mihkel Nestor said Wednesday that it was difficult to say whether there is a recession ahead.

Reform Party leader: Parties need to pull together

Reform Party leader Kaja Kallas called for joint action from all parties in order to cope with any possible economic recession.

"Coronavirus is destroying the global economy and financial markets, and it is clear that these effects will sooner or later be transmitted to Estonia, which has an open economy," Kallas said.

"Political consensus and joint action are needed to deal with the spread of the virus and the possible economic downturn. I am offering all parties discussion; ideas on how to cope better as a society in uncertain conditions," Kallas said in the statement.

"I want the government to be open about coronavirus and not be afraid to engage the opposition (i.e. Reform and the Social Democratic Party-ed.). It is in our common interests to mitigate fully the negative impact of the virus on Estonia. If the government wants support from the Riigikogu and a balanced discussion on possible changes to the law and the state budget, the Reform Party is ready," Kallas continued.

Preparations for economic cooling must begin with a clear picture of the financial resources the country, Kallas said.

Reform Party chair Kaja Kallas. Source: Siim Lõvi/ERR

"We need a realistic overview of the existence of the reserves of the Unemployment Fund (Töötukassa), the Health Insurance Fund (Haigekassa) and other government reserves. Then we can think about how to replenish the various reserves where needed, and increase the flexibility of the state budget to mitigate the negative economic effects of coronavirus," she went on.

The Estonian healthcare system is in the frontline of the fight against coronavirus, Kallas said, and healthcare institutions and the social system should receive supplementary longer term funding, given costs and other requirements in dealing with the outbreak may extend further than currently anticipated, she said..

The Reform leader also called for a concrete solution in concert with social partners, to anticipate a situation where coronavirus was spreading and people have to be absent from work.

"Entrepreneurs and employees need to know if and how the state is prepared to intervene to support businesses, and to ensure that people do not lose their income due to the outbreak.

This solution is necessary, Kallas said, because it is primarily uncertainty which can lead to economic cooling. Businesses and municipalities should receive clear guidance on when additional restrictions may be applied in Estonia, such as possible restrictions on public events, travel and other economic activities, Kallas said.

"If the restrictions come on suddenly and overnight, the effect of panic they bring will be greater. Managing the expectations of entrepreneurs and people and being prepared to adapt to the situation are important," Kallas said.

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Editor: Andrew Whyte

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